Anybody have experienced the premium sudden falls immediately after taking entry in an Option…? Won’t it feels like personal target because before our entry, the premium will be keeps trading normally… But as soon as our entry, the premiums starts to behave abnormally & the price will never reach back to our entry price even the market moves in our favor…
Maximum it will reach near to our entry price even the market starts to move in our favor. But it will never cross above our entry price so that ultimately we have to exit the trade taking loss.
It’s because your trades are predictable by Jane street et all. The pump is orchestrated by them in options, then the underlying and they dump the options to you. They know what to draw on the chart, which makes you/most retailers buy/sell.
Yes You are right , now the new issue is that , say if you place a Spread order ( Buy Higher strike , sell 2strike below) if you execute it , The lower strike premium is more then the Higher strike , its crazy thing, may be new type of Algo’s is doing it
People enter a position when the market has moved recently, like in the last candle or so. Because of that, there is higher volatility in the option prices, which takes a few candles to go away. Now, that candle could be daily, or it could be hourly or 10 minutes or 15 minutes. So when the movement fades, the option prices start to fall. Basically, they decay slightly because volatility has gone, or reduced. So it’s nothing done by the people in the markets. It’s not some kind of manipulation. It’s just that it’s a habit of retail to take entry when the market is moving, rather than waiting for the market to calm down and then taking a position.
